The side that is consistent the published information on the topic. Here's a statement from one of the credit reporting bureaus.

https://www.experian.com/blogs/ask-e...-build-credit/

It took a while to nudge her past her two big misconceptions:

* If you don't carry a balance, they don't make any money off you, so why would you have good credit if you don't carry a balance?

-- The credit card companies make money every time you use the card because there's a fee that they charge the merchants for every transaction. So even if there's no fee and you pay off your credit card, they can make money off of you when you use it.
-- The credit card company doesn't give you the credit score. Your credit score is done by a third party called FICO. FICO's only interest is in your credit worthiness, and they don't make money off of whether you carry a balance.
-- Sitting with a $50 balance and paying 20% interest each month makes the bank or credit card company something like $1 per month. If they give you a loan, they will make much, much more. So if you're applying for a loan, they're not going to look down on you because you haven't been paying them a pittance every month. They're going to put themselves in position to get more money off of you.

* Don't you need to have balance to show that you can make payments?

-- When you use your credit card and pay it off, that shows you can pay your debts. And that's what credit worthiness is all about.
-- You do need to actually use the card, though. You actually have to show activity to establish a payment history.

And I think that last one is where a lot of confusion arises. Having a payment history is not the same as carrying a balance, and some people think of "making a payment" as paying your bill but still having a balance (because "paying off a debt" feels/sounds different from "making a payment on a debt" to some people). So I suspect it's really just a wording issue that has people mixed up.

Your payment history is that you've paid your bills on time. It's just a label that shows that you've paid on time, that you're late, that you're super late, or that the company has sold your debt to someone else (collections). And this label matters A LOT. It doesn't matter if you only owe $1. If you have late payments in your history, that's bad for your credit score.

Or, when that annoying person at the dealership won't take Bellagio chips or Ethereum, reach into your backpack and pull out a few rubber banded stacks of fun tixs.

@AaronW, when you talk about "carrying a balance", are you and your friend referring to the same thing?

I always carry an interest-free balance: that is, I pay my last statement balance in full each month, but I never pay the full current balance. You're never charged interest for charges made since the last statement, so the remaining balance is interest-free.

This keeps your credit utilization where it should be for optimal scoring and is basically free money until you either die or decide to pay it off.

She literally meant an having an amount of money owed on which you pay interest, and that's also what I think of when I think of "carrying a balance." This came up because she just had a 0% balance transfer expire and she was trying to figure out what do to next. She had the money to pay it off, but because she felt she needed to carry a balance, she was trying to figure out exactly how much a month it would cost her to keep the balance where it was, and possibly decide how much of it to pay off or try to find another 0% balance transfer deal. Basically, she was trying to out-clever the system.

But you're right in that charges since your last payment are on your balance, even though you're not paying interest on it. And I do the same (pay off last month's statement and not the full balance). I don't do it for credit score. I just think it's convenient and doesn't cost anything.

People who carry a balance on their credit card for no reason other than "keeping the balance up" deserve to pay the stupid tax that they incur on themselves. IMO

Using credit cards to help build credit is something I've read a lot about lately and discussed with a couple friends because we are all old men and we sure as hell aren't going to talk about poker, but there are still a couple things I don't really understand.

Specifically, I've read that you never want to carry a balance (what I mean by carrying a balance is having that balance at the statement/due date when I have my autopay set) of more than 10-20% of the max credit line. First of all, that's a pretty big range, what should the real number be? Additionally, I assume that as long as the balance is paid in full that it can never hurt your credit. Is this correct? If so, does this mean that if I was carrying say a 50% balance every month and paying it in full each month, that my credit as a result of my credit card habits would increase slower than if I carried and paid 10% of my max every month?

Does paying off the card multiple times a month manually help me any more than just letting autopay do its thing once a month if I'm charging only ~10% of my max credit each month? Does charging say 50% of the total max each month and paying like 15/15/10/10% each week manually help me any more or less than just charging 10% a month total and letting autopay do its thing?

I'm just a grey haired man-child with very little clue as to how the real world operates. My credit is good but not stellar and includes a couple negative marks for a handful of reasons ranging from a thing that I'm fairly sure shouldn't even exist that I should check out to being cash broke for most of 2012-13 and carrying an enormous % of my max credit each month since I couldn't pay it. Prior to 2012 and since mid 2013 I have been a good boy. My studying came as a result of talking about credit with a friend (regular poker player, receives no paychecks) who has phenomenal credit despite not having a car lease, home loans or anything special that I know of, and I'd like for my credit to approach that level in the next couple years if possible. I want to lease a car in the very near future and despite having good credit and paying my taxes honestly, fear that being 32 and never having received a paycheck in my life will mean that I have to pay an excessive amount upfront or have an absurd monthly payment. I've accepted that for this car, but would very much like it if I could build my credit (and generate worthwhile non poker income streams) so that I don't have this concern in 3 years.

There is no "right" number. I'm sure there's a number that optimizes the formula, but it doesn't make much difference. It's not like there's a prize for having a perfect credit score. I think the number quoted earlier in this thread was 720 for where the inflection point is. But chasing 850 is like someone who has a 98% in class but wants extra credit to bring it up to a 99%. It really doesn't matter at that point. It's just a number.

So the reason for the range of values is because anything in that range is fine.

Pretty much yes. There may be some quirk in the system that might hurt you a tiny bit, but it's nothing that you be trying to adjust for.

I have no idea how to optimize raising your credit score in the least amount of time possible. There are some extra details here that matter.

Your credit score has natural fluctuations based on the information available when your credit data is pulled. For example, if you spent $5000 on a credit card for a family vacation, your credit score is probably going to be lower after vacation if the data was pulled after the vacation instead of before because you will show a much higher debt-to-credit ratio. But then if you pay it off, it will go back down.

I doubt that it matters in a significant way.

Pull your credit reports once a year and make sure that all the information is correct (no random credit cards or collections... because that can and does happen). There's a way to dispute errors directly with the credit bureaus. It's not fun, and you have to be persistent.

It's not always best to pay towards old debts. That's a complex one that I'd rather not elaborate on right now. Just know that there's a statute of limitations and that some debts you have no legal responsibility for if they're old enough, and that contacting the credit company may restart the clock on it.

It's unlikely that not having a regular paycheck will hurt your credit score. The credit companies don't have your salary information, just your credit information. But your car loan may require you to disclose some of that information when they try to offer you your lease terms.

Time is your best friend when it comes to raising your credit score. If you use it and consistently pay on time, your score will creep upward. That's most of what this is all about.

And don't lease a car if you care about money. It's a bad idea for the overwhelming majority of people. (I've heard some people argue that in certain professions where you drive around clients such as realtors, that having a new car conveys a better image and things like that. I'm skeptical that it makes a huge difference, but whatever. It's their money.)

Thanks. There are 2 actual marks when I check my credit. As far as I know, the sources are:

1. ~4k hospital bill from summer 2013 that I'm never paying because I was not advised as to the insane cost I would incur if I stayed overnight when I went to the ER for a minor issue. Didn't want to stay overnight but it was strongly suggested that I do so. As far as I'm concerned they tried to rob me and they can piss right off before I'll ever pay.

2. ~4k for some debt my mother incurred before she died in fall of 2013. This one came up when I had a lawyer for a different reason and I was told that I have no responsibility to pay it as I was not made aware of it in time.

And then the 12-18 months where I carried a large balance on my primary credit card, but before/after I have carried $0 every month on all cards I've ever held. My inclination has been to just ignore the hospital bill one since it's definitely on me, but the other one I have considered pursuing at times.


Right, I understand that lack of paycheck doesn't hurt my credit. I just meant that they will surely want paystubs/W2s/1099s/whatever and all I can provide is 1099s which to any rational person should be more than sufficient but I fear may not be.

As far as leasing, I have no real desire to actually lease. It's just that my current car is giving me more and more problems and I have a pretty specific idea of the car that I actually want that doesn't exist yet (Tesla-esque SUV that can go 400 miles on one charge and costs <75k) but I expect will exist in 2-3 years, so I need a new car and leasing something until the car I actually want to buy exists seems possibly optimal. Buying pre-owned is also an option I suppose.

I tend to overanalyze things so I'm sure that's the case to a large degree here. Like I said, my credit is quite good but I'd like for it to be better and I'd really just like to get over 800 in the next couple years which doesn't seem particularly unreasonable. For all I know, come 2020 or 2021, between my normal credit using habits and the 2 negative marks coming off (it takes 7 years? I forget. Done lots of reading and forgot bits and pieces), I may sail past 800 easily. I just like having a plan and most of my life thinking these days is based around how to best build for a future that hopefully includes never being dealt another hand of poker.

#1 is just a decision you're going to have to make for yourself. You can refuse to pay on principle and accept the consequences. It's probably been sold to a collection agency at this point and so the harm that has been done to your credit has already been done. You'll want to find out what the statute of limitation laws are in your state just so you know what's happening.

#2 shouldn't be on you unless you paid it with your credit card or unless you co-signed something. If your lawyer says you're nor responsible, then you're probably not responsible and it shouldn't be on your credit report.

Try CarMax. I like that you get around all of the haggling and can just go in and get a car that you want at a reasonable price. If you're looking for a car to ride around in for a couple years, that's probably still a better move than leasing. It will also give you flexibility on the back end if life doesn't play out the way you expect it to.

For example, if there's a delay of a year or two on the production of the vehicle, but you've already locked yourself into a specific leasing term, you're going to have do something else in that gap year and that will cost you more money. Or if you hear early bad reports about the car you were thinking of getting and want to take a wait-and-see posture.

7 years sounds right for old things to roll off your report. If you're above 750, you really don't have to worry about anything. Even 700 is quite good. Don't do anything silly to "try" to get to 800. It will happen naturally over time if you just pay your bills on time.

Can you actually inherit debt, apart from debt backed by an asset with greater value that you also inherit? I certainly don't think it should be possible.

I don't know for sure, but there have been times where I had a large utilization ratio and I paid some of it off well before my statement came just in case that would hurt me. I think they do track the maximum statement balance.

One potential problem is that you can have a great credit score, but if you've never had an auto loan or lease before, it may be difficult to get one at the best rate. Higher score will help, but there's not much you can do other than get the first one and pay on time.

As far as I know, no. If you didn't cosign for it, you don't owe it. But most debt collectors are scumbags and will try to get anyone to pay it. Look into the FDCPA if it happens to you.

Lots of different ways things can go depending on if an estate is solvent or not and what type of assets are involved.

As it was explained to me, I'm not individually liable for the debt, but the estate is responsible for it as long as creditors notify me/my probate lawyer within X period of time (I think it was 6 months, don't remember for sure). After that point, they have no legal right to the amount owed but often still harass people with calls/mail.

This is to the best of my recollection during a not particularly enjoyable period of my life and other states certainly may have different laws.

#1 is a personal choice. I'd personally just ignore any letters and calls trying to collect against said debt. Once the 7 year window passes, the collection agency can no longer sue you. This is where the term zombie debt comes in. The CAs can't enforce you to pay it, but they'll still try, to which you can just say F off. That said there are specific scenarios where the 7 year limit gets reset, I believe making a payment to said debt qualifies as one of them.

#2 is trickier. IMHO consult a lawyer in cases involves parents / estates / family. Generally unless the debt is you/your spouses, you didn't cosign, have ownership the debt doesn't carry over. Don't make any sudden financial decisions/payments against debts because you don't want to trigger an event where you assume the debt - if that's possible.

Maybe MacauBound can chime in on this one, but I would think your income and occupation would matter more than lacking having loans on your credit report.

A small influence to credit decision is based on having a good mix of credit: normal credit cards, charge cards (cards where you pay in full each month), student loans, auto loans, mortgages. It shouldn't move the needle though. If you have a bunch of cards with long history that is just as good. As soon as a loan is paid off the account it considered closed.

JFC do not buy a car at Carmax. Do not buy a used car, if you can help it (that's understandably not an option for many people). But if you do, try to buy one at a factory dealership that obtains their retail units via trade, mostly, instead of a used car superstore that obtains most of their inventory from auctions, rental car companies, and other oddball ways.

Lemme tell you what every pre-owned manager (including myself, previously) does to the used cars you buy:

We take in a trade and determine if it is more profitable to be re-sold as a retail unit, or if it will be sent to auction. If it is more profitable to be re-sold on the lot, we bring the car into service and service does the same thing to sales as they do to the customers - they try to sell us some stuff that we do need and some stuff that we don't need (service doesn't make any income off of sales and vice versa).

99% of the time, even if the car is going to be sold as factory CPO, I tell the service advisor "no, no, no, yes , no, no" and start crossing things off the list. "4 tires? Nope, only the rear tires are below 3'''. The transmission is fine, don't touch it, by the time there's an issue we will be out of lemon law territory. Just do the lube/oil/filter, wiper blades, and rear 2 tires. And gimme the cheap tires. It's a '12 TSX, not a new Porsche". 1% of the time, if the car is really highline (50k+) and can only be sold if it's mint, we will choose to do most of the recommended service. The only service we do by the book is safety-related, which is basically only brakes. No matter what, the sales people are to show any concerned customers how much service we did to the car once it was traded in. "We only retail the best trades here; most cars don't make the cut and get sent to the auction."

I spent 50 hrs/wk looking for exploits to put more food on my table, as long as the cars were safe. If we ensured the car was safe, it was always in our best interests to let the customer find out in 9 mos that their '15 MDX was in a bad accident that Carfax hadn't updated yet (but the dealer knew about), or that the wheels on Toyota/Lexus SUV always go to **** real quick, even if we had our wheel guy dress them up for $75/wheel so they'd look ok for another 6 mos.

The first exploit I figured out was buying cars from auctions w major body damage (but that had not been reported to Carfax) and getting my body guy to fix it cheap as possible, in order to re-market it as a Clean Carfax One Owner. Bc it that's what it was, technically. I got a nice bonus from the GM once I figured this out. So that's the type of reinforcement we received to keep trying to find ways to make more money, in the same way the customer tries to find ways to beat us out of money. DO NOT BUY USED CARS THAT WERE EVER AT AN AUCTION. Off-lease or rental cars are almost as bad, due to the way the previous customers would treat cars that they only planned to use for a short period of time.

Used cars are a huge gamble. Like any gamble there are winners (cars that were actually babied and driven light) and losers (lemons, or cars that were under-serviced), but the house always makes sure they win.

Leasing a car is actually not a bad idea, tied for 2nd w getting 0.99-1.99 (obv paying cash for a depreciating asset is best). You don't have to worry about major service issues and your payments are lower than financing. These days, w the low margins on new cars, the manufacturers have come to the realization that they have to do more volume. How do they do that? By incentivizing people to buy a car every 36 mos w attractive lease offers, instead of selling them a new Accord that will last 10-15 years and require minimal service if driven well. Leases do require better credit scores than buying new or used, in general. At Acura, 710 transunion was required to get top-tier lease payment.

I tried to buy out my leased S5 (only 6 spd manual AWD luxury sports coupe under 75k I think) in BTC when it was on the way down at 16,5. AFS rep said, "Oh I've heard of BTC hihi, but unfortunately we can only accept a check or bank wire." So coinbase-boa-afs it was.

The car business could take Mother Theresa and turn her into Courtney Love if she worked there for a year. It is a degenerate's paradise. Everybody is looking for loans, betting, drinking, girls, etc, etc. When we couldn't find things to bet on, there was this dreidel that was lying behind some file cabinet and we would spin it and everybody would take a side and throw in their $20. At many stores, fighting was not discouraged when 2 employees had an argument. The thinking was "we can't have these guys bringing their negative energy into the store. Tell them to go out back and handle it and put it to rest so we can sell some cars." People would obv bet on these fights and it created so much camaraderie and positive energy that inevitably, both guys would hug it out, and sell a hat trick more times than not.

This girl Shauna (not hating the player, just the game) used to exploit these ******ed guys in the car biz who are straight tricks. She would go from one dealership to another, flirting w her mark (always someone at least one paygrade above her of course) until he made his move. Then she would sue the store, while still working there of course, which gave her even more leverage, until they paid her to go away. The mark always got fired immediately obv. Eventually, her name got around and she moved on I think. But that's what happens when some 40-something tries to hook up w a 25 yr old subordinate - they get what they deserve - and it illustrates what a lot of these car biz lifers become, at least all around N.E. That was before #MeToo, so I'd imagine there's slightly less of that stuff now.

Glad I kept my friends from the car biz, but it's not something you would want your child to get into imho

You sound only slightly jaded.

A bonafide finance manager or finance director could give the precise answer, but I know what most of the equation consists of.

Credit score will always be the biggest determining factor. If you've had a mortgage, or anything else that would allow you to attain a high credit score, it won't matter if you've never had an auto loan. Your previous credit history w the particular manufacturer, if positive, can help a lot though if you are on the brink between two tiers.

Next, if your score is on the brink (like 700), then the dealer looks at what type of 700 you are. Acura Financial sucks for the dealer, bc you could have a 705 and have paid a previous Acura/Honda off completely, but if there was even 1 or 2 thirty-day late on the credit report, they wouldn't give the customer "super-preferred", Acura's top tier rate, which requires a 710 transunion. So people that had paid Acura/Honda in full and made 80k w P.O.I. (which is big these days, now that the good ole days of "stated income" are gone) would be told that they only qualified for "preferred". Needless to say, they weren't happy. It would then take a call from the finance manager to AFS and finance would yell at AFS "Are we here to sell cars or not? Why are you trying to screw up our deal? This guy is ready to go." Then AFS would sometimes relent and approve the loan at super-preferred. I know Toyota/Lexus is more reasonable. GM is really good at getting stiffs bought. I'm not sure about the particulars of other manufacturers, but the general formula is the same everywhere.

So general order of importance: 1) credit score 2) decently high P.O.I. 2a) what type of 650 is he? There are good 650s and bad 650s 2c) history of paying auto loans

For people buying used or new w scores around 650, there is much more haggling between finance and AFS (if new) or whatever bank/credit union (if used). I'd compare it to the way defense attorneys and DA's haggle w each other over plea deals.

"My client will take a 3-4." "For 200 grams? No way. He gets 5-5 and a day and 10 years probation. He's armed career criminal level 1, remember." "Ah, the last one was 8 years ago. Where you think he lives? Beverly Hills? Don't hold his teenage mistakes against him. He's got a kid now. How about a 4-5 w 5 yrs probation for the dope and you throw out the A+B on the cop?" "Ok fine, you're paying for parking the next two games, though. And your indecent under 14 is getting smoked." "Yeah sure, whatever. The guy's a clown. He'll be lucky to make it out alive haha."

Conversation might be like:

"Hey the guy is a strong 648. He's been employed at same place for 8 years and has a mortgage. He's not going anywhere. Let me get a buy rate of 3.99 for 60 and the next couple I send you will be grade A, I promise. I need this one to make bonus, cmon."

"Sounds nice and all, but I still remember you burned me on that last 625. I'm still catching heat for that one. He never made 1 payment! I'll give you 4.24, but you can only mark it up to 5.49. We both know he can't afford this car. And you owe me a bottle of scotch."

You can’t inherent a debt absent you personally agreeing to it before death

Amazing! A+ stories.

Fatwallet Finance used to have a thread on auto auctions through Manheim(sp?). Are there people who that looking to flip cars for fun and profit or are people just trying to get their dream car at the lowest possible price? Also why would a dealership buy cars through an auction to re-auction them?

My car advice: buy last year's model brand new.
Dealerships offer huge discounts when they're clearing inventory. Got 6k off a 2017 camry.

Manheim is one of the largest auction groups, along w Adesa. Auction customers fall into a few categories:

1) Dealerships - their POM will buy cars that come from various places, recondition them, and then hopefully re-sell them for a profit (made easier w the back end profit as part of that calculus). Every individual store has a different approach to used cars. Our 3 dealership group (Chevy/GM, Acura, and Hyundai) had a very aggressive approach to used cars; meaning our owner wanted us to retail "edgier" cars, such as older, high mileage stuff. So we would purchase cars that more conservative dealerships would send to the auction. There would also be dealerships that weren't necessarily more conservative, but if they were an Audi store, they might not want to bother trying to retail a $10k Nissan Rogue. Most of my bids were put in online thru proxy w a ceiling. We had advanced HUDs that would allow me to scan auctions online throughout the country and appraise possible purchases and then bid on them. All off-lease cars are sent to auction by the manufacturer, unless one of that manufacturer's dealers wanted to purchase it for a fixed price first. So for Honda/Acura, dealers had access to a special online auction called VIPS. Any cars that weren't bought on VIPS within 2 weeks would be sent to a B+M auction. Condition reports are generated for each car by the auction group on a scale of 0-5.0. If the car you bought didn't arrive in the condition as advertised, you could file for arbitration. But that's a huge pain in the ass.

2) Local garages that might keep a small inventory of a dozen older cars and sell them for cash only. They would buy the cars we would send to the auction (for ex. an '03 MDX 175k needing a transmission and rusted above the wheel well like those models often have) and then do the service/body work themselves and flip it. Joe's Auto Body faces fewer regulatory obstacles than Herb Chambers Mercedes when selling used cars.

3) Regular people who may be able to service/recondition the cars themselves and want to save money w their sweat equity. Sometimes they might not be handy, but are looking to buy something like a '17 BMW 7 Series that has been repo'd and they want to gamble on the cheaper price the auction provides, as they have no recourse if it's a lemon, or it might not be a lemon but will need more service than they estimated, making their decision to buy that car from the auction -ev

That's good advice. To delve deeper, you will get especially good clearance deals if the '18 (or currently the '19) will be a new body style. And to ensure your car hasn't sat on the lot for 10 months, through 4 snow storms, without being test driven more than a few times, try to find something that fits this clearance model that was built as recently as possible. For ex. look for manufacturers that put out their '19's early in the year (like June/July) and the '18 you are buying was built in December of '17, so it's only been sitting on the lot for 6 mos or less. The dealer will always try to sell you the oldest model in inventory. You can insist on getting the newest; the squeaky wheel gets the grease.

Macaubound killing it ITT. Awesome dealership insight.

Leo doc rule, people.

Just buy your cars with cash and nobody needs to pimp out your loan. You can even put up to a certain amount ($5k?) on a credit card so you can get the cash back.

Save your credit for things that appreciate in value.

Those who can, should. Those who can't, can't.

https://www.cnbc.com/2017/06/28/that...americans.html

https://www.forbes.com/sites/davidki.../#50cf9410632d

The conversation is interesting, but anyone here who thinks that people can just buy a new car with cash is living in a reality that is extremely disconnected from the reality for most Americans.

I would also add (though the articles don't point this out) that if people aren't able to afford the monthly payment on a new car (edit: without extremely protracted loans), they probably don't have the cash to buy a used one.

You're making this cool "average American" argument while giving all this credit advice to Sean
Who plays in games that have a buy-in > a luxury car. I wasn't joking when I said "see if the dealer will take Bellagio chips, if not, just use bundles of $100 bills". The photo is gone, but it was him sitting on a $120K stack. At the Bellagio. He was on LATB a couple weeks ago, up about 1 barebones Telsa Model S playing drunken high stakes NL. Generic advice aside, he should just decide how much liquidity he can easily give up and pay for a car without credit.

People? Me. Yes, paying cash for cars. The only question is how late a model used car -- I'm cheap. Other people ITT? New cars any time they want. I assume that most people in this thread (callipygian, Captain R, That pope, leo doc, Sean, you, ninefingershuffle, etc) aren't a random sample of Americans, but mostly people who are a threat to show up to a casino with large amounts of money. Thus, the "average American" is a debating device. The average person in this discussion could write a check for a decent new car, tomorrow.